This week the market has looked increasingly like a game, given the next big thing that’s swept over Wall Street. But when it comes to Pfizer (NYSE:PFE), owning shares is no laughing matter. PFE stock remains a well-priced, calculated investment with a couple of aces up its sleeve. Let’s look at what’s happening off and on the price chart in the drug giant, then offer a risk-adjusted position in Pfizer stock that’s aligned with those findings.
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GameStop (NYSE:GME), or “Gamestonk!!” as Elon Musk exclaimed on the Reddit message board earlier this week. You don’t need me to enlighten you of course. A surge in GME this week from about $65 to a high of nearly $500 has become Wall Street’s version of David versus Goliath. It’s been front page news and had social media trendily abuzz.
So, what’s that have to do with PFE? Maybe nothing or possibly everything.
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PFE has been booted off the proverbial main stage by GME, cryptocurrencies, and EV-mania despite basically saving mankind.
As with GME, you don’t need me telling you what Pfizer is about. One word. Comirnaty (BNT162b2). OK, maybe you’re not familiar with the actual drug. But Pfizer’s vaccine, in partnership with Germany’s BioNTech (NASDAQ:BNTX), is important business in a world besieged by Covid-19.
Why I Like PFE Stock
With the over-the-top action in GME and its peers, today’s latest game being played on Wall Street may have investors looking in the wrong direction and mistakenly admiring what a solid investment looks like. Bottom-line, it looks like Pfizer stock.
There is Comirnaty of course. But I lied. PFE stock is actually so much more than simply Covid-19. That’s just an ace up the drug giant’s sleeve. Mutant Covid-19 variations be damned…though we obviously hope for the best on that front.
Pfizer is expected to grow its annual adjusted earnings-per-share by roughly 10% over the next few years. And that forecasted performance doesn’t include Comirnaty’s sales. It’s backed by a diverse portfolio of important drugs as well as an enviable pipeline poised to deliver additional growth for the company. As it stands, Pfizer expects to have 25 new products in the market by 2025. Great, right? There’s more.
Pfizer is a stock you might liken to Rodney Dangerfield due to its, “I get no respect” ways. It’s fetching an attractive price multiple of just 11.5x next year’s earnings. Toss in PFE’s healthy dividend of around 4.2%, and a second (or third) ace up its sleeve vis-à-vis a price chart close to stealing the spotlight from other spectacles (or not), and it’s showtime for Pfizer investors.
Pfizer Stock Weekly Price Chart
Source: Charts by TradingView
To be clear, Pfizer stock is never going to produce GME or TSLA stock-like returns. I think PFE’s subpar, non-dividend adjusted flatline performance in 2020 amid the coronavirus is the latest testament to the obvious. However, investors can still grow their wealth handsomely over time. And today there’s no time like the present to begin that journey.
Technically and out-the-gate in Friday’s session, shares of PFE are bucking the broader market and up about 2%. Again, that’s not a bucking bronco like GME, which is up more than 80%. Still, it’s the type of price action that deserves respect.
Moreover, today’s bid shares have put together a weekly engulfing reversal candlestick formation. The bullish pattern has developed within the upper region of a key support area from roughly $33.50 – $36.50 comprised of multiple trend lines and Fibonacci levels.
Ideally, weekly stochastics would be properly aligned or at least oversold. Neither is true, but that type of price action does appear close at hand. And in an imperfect world amid the GMEs, cryptos and the like, I’d say it’s enough, rather than thinking “enough already!” to buy a solid investment made more secure with a highly-mutable Pfizer stock collar ready for the best and worst of days.
On the date of publication, Chris Tyler holds, directly or indirectly, positions in bitcoin (GBTC) and Ethereum (ETHE, ETCG) but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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